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About the course
A 3-day case study based workshop exploring issues in corporate valuation and financial modelling.
Corporate valuation is used for the purposes of investment, M&A or as part of internal measures of financial control. It is extensively applied when companies issue new shares, divest operations or acquire other companies. This highly practical course will lead you quickly from the basics through to the more advanced valuation methodologies and modelling techniques.
- Building a comprehensive financial model.
- Understanding business models.
- Absolute valuation methods DCF, EVA and CFROI.
- Developing an appropriate cost of capital.
- Decomposing sources of return.
- Using comparative valuation measures.
- Understanding the basics of real options.
- Dealing with intangibles.
- Valuing fast growing companies.
This hands-on programme is taught using a combined interactive approach which incorporates case studies and exercises to reinforce the concepts covered in each teaching session. Emphasis is placed on delegates gaining practical experience of the various valuation techniques. Case studies from recent deals are included, as are practical exercises involving problem areas in valuation. The programme also includes critiques of the conventional techniques and considers suitable alternatives to be deployed in differing circumstances as well as an update on the latest valuation reporting guidelines and their interpretation.
Module 2: Corporate Valuation – techniques and application
Enterprise value versus equity value
- Calculating equity value including NCI
- Calculating gross debt and net debt
- Adjusting for provisions, quasi-debt, equity linked instruments, equity kickers, options etc
Introduction to corporate valuations
- Valuation fundamentals
- Drivers of valuation – ROIC, WACC, growth, size
- The FCF perpetuity valuation formula
- The key value driver valuation formula
- Economic profit and enterprise value added
- ROIC vs. WACC – computation and drawbacks
- Case studies: valuing companies using the above formulae
- Equity multiple valuations based on net income, EPS, dividends and NAV
- PE ratios, PB ratios and dividend yields
- EV multiple valuations based on revenues, EBIT, EBITDA, EBITDAR
- Adjustments to group EV to derive operating EV
- Adjustments to EV multiples to derive the correct underlying multiple
Day 2 Multiple valuations continued
- Choosing comparable firms
- Reconciliation of multiple valuations to the key value driver formula
- Examining how using different multiples gives different valuations
- Earnings versus cashflow
- EPS dilution/enhancement
- Case studies: valuing companies using multiple analysis
- Calculating OPAT and unlevered free cashflow
- The CAPM; unlevered and levered betas, risk premia, kd, ke, tax shields and WACC
- Explicit forecast period and terminal value
- Assessing the terminal value (multiple or perpetuity method)
- Case studies: modelling in Excel to produce DCF valuations
Day 3 DCF valuations continued
- Importance of final year forecasts – fading the forecasts
- Comparing valuations using multiples vs. DCF
- Advantages and drawbacks of each valuation method
- Calculating NPV and IRRs
Impact of corporate finance transactions on valuations
- Friendly/hostile takeover
- New equity offerings – calculating the TERP
The impact of capital structure on valuation
- Increasing equity value through the use of debt
- Focus on shareholder value – dividend policy and share buybacks
- Companies suited to leverage
- Debt markets and credit ratings
- Analysing debt capacity
The impact of qualitative factors on valuation
- Credit ratings and outlooks, country risk premia, CDS spreads, interest rates, currencies, geo-political risks
- Growth outlook, volatility, technological risks, impact of internet, regulation, level of competition, scope for differentiation, barriers to entry, new competitive threats, capital intensity, changes in vertical integration, buyer power and supplier power, changing consumer habits, product life cycle, degree of consolidation vs fragmentation
- Market position, competitive advantages, cost position, ability to innovate and re-act, new product introductions, product and geographical diversification, level of vertical integration, event risk management, M&A track-record
- Corporate governance, management, operating, financing and corporate finance strategies
Trust the experts
Former Executive Director of CSFB and Lehman Brothers, the Course Director has spent seventeen years working as an investment banker in Europe and the US. She has principally worked in the credit markets and has experience of the US and European high grade and high yield markets, the European new...